Hauling Off Dozens of Cartons, D.A. Rifles National Arts Club

Friday, Jan. 4, was “artist pick-up day” at the National Arts Club’s Gothic Revival building at 15 Gramercy Park South, the day that some 70 artists-all members of the 104-year-old New York institution-arrived to reclaim their works after the club’s popular annual show of exhibiting members.

When the artists began arriving that morning, however, they found that approximately 20 police detectives and agents from the city’s Department of Finance were making a more unsettling kind of pick-up. The law-enforcement officials had arrived at the crack of dawn with a search warrant and orders to raid the club’s administrative offices as part of an investigation into possible grand larceny and tax evasion started by the Manhattan District Attorney’s office.

By the time the officers left around midday-departing with 40 boxes of files that they loaded into a van-talk of the incidents and its ramifications had traveled well beyond the leafy precinct of Gramercy Park.

“The news spread like wildfire among us,” said one longtime member, who spoke on the condition of anonymity. “It was nonstop phone-to-phone, even though we knew something was going to happen … it was just inevitable, like a volcano that had to erupt.”

Controversy is nothing new to the members of the National Arts Club. For more than a decade now, the organization and its president, Aldon James, have been at the center of numerous public dust-ups involving not only the governance of the club but the administration of Gramercy Park itself. Until Jan. 4, Mr. James and his group of staunch supporters-which includes his twin brother, John James-have remained relatively unscathed by all the criticism, and the club has continued to chug along with the ivy-covered joie de vivre found in old Woody Allen movies.

But with the arrival of the N.Y.P.D. and the District Attorney’s office, some club members-most of whom spoke only on the condition of anonymity, because they didn’t want to risk losing membership or, worse, a legal battle with Mr. James-are predicting that the stage is being set for a final reckoning for the N.A.C. and its administration.

Three days after the raid, a sense of normalcy seemed to prevail at the club. At its annual gold-medal awards dinner on Jan. 7, Mr. James took the stage to a thunderous round of applause and, according to a witness there, walked around the place looking as he always has: sprightly, effete and debonair-a New York version of Frasier Crane’s younger brother Niles.

Through his spokesman, the well-connected public-relations executive Ken Sunshine, Mr. James declined to comment or be interviewed for this article, but Mr. Sunshine did say that business at the club was “continuing nonstop with no change.”

According to Jody Widelitz, a club member who has spent some time at 15 Gramercy Park South since Jan. 4: “If nobody had known about the raid, you wouldn’t have thought it had happened. There is a mild buzz among some members, [a] ‘did you read this article?’ sort of thing, but there’s varying degrees. Some people still refuse to believe anything, and others say ‘I told you all along.'”

For those familiar with recent developments at the N.A.C. and recent investigations into club matters by the city’s Department of Finance and the State Liquor Authority, however, the raid and its implications were no matter for applause.

As The Observer reported in 1992, Mr. James has been under fire practically since the beginning of his tenure as club president in early 1986. He initially received praise for bringing the club “into the 20th century” by substantially fattening its membership list and making its awards hot commodities. Writer Tom Wolfe was a recent honoree, and director Martin Scorsese has been touted as a member. But some members regarded the endless stream of parties and fund-raisers held then as straying from the club’s artistic tradition.

Founded by New York Times art and literary critic Charles de Kay, the National Arts Club had been a meeting place for the Ashcan School of painters and American impressionists. But increasingly it seemed to be serving as a shabby-chic social hall where Mayor David Dinkins or Senator Roy Goodman threw parties and the guests ranged from playboy publisher Morgan Entrekin to former Second Lady Tipper Gore and hard-ass former Secretary of State James Baker. In 1991, Mr. James even hosted a book party for Lucinda Franks, wife of District Attorney Robert Morgenthau.

Under Mr. James’ leadership, member bulletins and, more recently, the club’s Web site featured countless photographs of dignitaries attending club functions, usually standing cheek-to-jowl with Mr. James.

“Yes, Aldon did very interesting things at the beginning,” said another longtime member, who also spoke on condition of anonymity. “But it seemed they were all done to foster his image and not the club’s. It became very obvious in the last years, when he held political events and did people favors to enhance his own image.”

At the time, one of the most prized benefits of N.A.C. membership was occupancy of one of the club’s 37 spacious prewar apartments, which boast prime location and below-market rents. Soon after Mr. James arrived, however, he became embroiled in a lawsuit with some tenants over rent stabilization at the club. Four elderly dwellers were eventually evicted. During the battle, some tenants found themselves thwarted when they attempted to get hold of the club’s financial reports and membership rolls. For critics of Mr. James, this was prime evidence of the secrecy that they contend pervaded too many of the club’s dealings. It was also a harbinger of the litigation to come.

With court permission, some tenants obtained the right to have accountants audit the club’s finances. The audit was completed in 1997, though auditors complained that the club hampered their investigation. The resulting report, prepared by M.R. Weiser & Co., hinted at a tax-fraud scheme.

Mr. James called the charges “chopped hamburgers,” and his supporters dismissed the audit because it had been ordered by one of the club members who, at the time, was embroiled in a lawsuit with the club.

According to some members, Mr. James might have encountered smooth sailing after that had he not made the decision to take on the Gramercy Park Trust-the entity that controls the city’s only private park-in a series of other lawsuits in the mid-1990’s. In the latest one, which claims violation of the civil rights of minority schoolchildren, Mr. James and other plaintiffs demanded damages. But they didn’t stop there: They also asked for a guarantee of equal access to the park-currently, only Gramercy Park residents can access the park with a key-and removal of two of the three lifetime park trustees.

The lawsuit not only antagonized a number of longtime Gramercy Park residents, who hired public-relations executive Dan Klores over the summer, it angered a number of N.A.C. members who felt that the club’s monetary resources were being wasted.

“Prior [to the lawsuit,]” explained Rob Seyffert, a third-generation club member, “we’d been rumbling a lot, mainly talking among ourselves. But now … our biggest gripe became the hemorrhaging of money towards lawyers, approximately $100,000 a year going to a lawyer’s pockets on issues not related to the National Arts’ Club mission, which is to educate the American people in the fine arts.”

A new coalition of members, which billed itself the Concerned Artists of the National Arts Club, formed to protest the escalating legal costs of these lawsuits and began a relentless campaign of letter-writing. The group grew to include some 100 active participants. Concerned Artists of the National Arts Club placed an open letter in a local community newspaper and created their own Web site last spring. On it, they posted private correspondence between members and the president, club bylaws, and a summary of the 1997 audit’s findings.

According to several sources familiar with the situation, the driving force behind the group was Nilda Misa, a lawyer and artist who is not a member of the club but once lived with Mr. Seyffert in one of the N.A.C.’s apartments. “I went to Harvard Law School; I worked in the Clinton administration for a number of years; and I’m familiar with certain financial, First Amendment and disclosure issues,” said Ms. Misa. “What can I say? A whole lot of bells and whistles were going on.”

Mr. James’ supporters contend the group was simply regurgitating the same material that the club’s initial litigants had used. “This is not a new group,” said Daniel Schiffman, a member of the board of governors since the beginning of Mr. James’ tenure. “It all stems from the same thing. I would be very surprised if Aldon had done anything dishonest, and until people succeed in proving that he has done something dishonest I won’t believe it.”

Enter Christopher Hagedorn, the 57-year-old editor and publisher of Town & Village , a community newspaper that covers the Gramercy area. Mr. Hagedorn is a member of the Players’ Club, another hallowed Gramercy Park institution, which had incidentally declared itself against Mr. James’ attempts to change park constitution. Mr. Hagedorn’s father, who started the family newspaper business in 1947, was friendly with many at the N.A.C and had taken his son there on several occasions. Mr. Hagedorn had even held one of Town & Village ‘s anniversary parties there.

But, last spring, when Concerned Artists wanted to place an ad airing their beef with the National Arts Club in Town & Village , Mr. Hagedorn said he had to review it for libel concerns. He said the ad’s content piqued his reporter’s instincts and he started investigating. According to Mr. Hagedorn, he made some calls, found some talkative members, got hold of the 1997 audit report.

Since then, he’s written more than 20 stories on the subject for his paper. Over a period of some six months, he examined the club’s potential evasion of sales taxes, its alleged failure to report taxable income and the possibility that the club had allowed a third party to use its liquor license, which is prohibited by the S.L.A.

Indeed, last spring, the S.L.A. began investigating the N.A.C. as well for just such a violation. “We received complaints from various individuals alerting us to the potential that something was not right there,” said Thomas McKeon, a spokesman for the authority. “We have issued a notice of pleading and they have to answer to that charge. We’re in the disciplinary mode at this point.”

Mr. Hagedorn also uncovered another bombshell. “The income from the dining room … was never reported … by the club,” Mr. Hagedorn said. With a chuckle he added, “Because we’re not the New York Times , we forwarded the story to the Commissioner of the Department of Finance.”

Approximately three weeks later, Mr. Hagedorn reported another scoop in his paper. The Dept. of Finance and Taxation was investigating the N.A.C. A department spokesperson denied that the articles had spurred the investigation, but a number of club members seem to feel otherwise.

One would think that, after years of fighting to shed more light on Mr. James’ administration of the N.A.C., the club’s dissidents would welcome these investigations. But one thing is keeping them up at night – namely, how Mr. James plans to pay to defend the club and himself from any allegations that may result from these inquiries. These members point out an N.A.C. bylaw, passed during Mr. James’ tenure (and featured on the Concerned Artists’ Web site) that could result in the president receiving the club’s financial support in the case of a lawsuit. For a James supporter such as Mr. Schiffman, such a bylaw is not-for-profit boilerplate and no grounds for members to complain.

Yet critics of Mr. James worry that some of the club’s sizable art collection, which the 1997 audit said had an appraised value of $4.9 million, could be sacrificed to pay for the club’s legal bills.

Said one longtime member of the N.A.C.: “Right now, we’re coming up to a very difficult time for the club.”